I joined a growth roundtable at First Round Capital last week, which included trategyome really sharp thinkers like Gina Gotthilf from Duolingo and Ashley Berman from Birchbox. It ended up being an enjoyable and illuminating conversation about growth strategy, acquisition and retention tactics, and org design. While it was a closed session — so I can’t share the conversation directly — we spent a good bit of time talking about how we built and structured our different Growth teams. Where did Growth sit in the company? What were different members of the team responsible for? How did Growth’s acquisition and retention work interface with the broader organization? What are best practices?
Since this was a topic of interest for Growth leaders well into their careers, I decided to write up some of my own thoughts, observations and experiences building a Growth team and observing how other successful Growth teams operate. I won’t go into strategy here, but instead want to cover Growth team structure, roles and responsibilities, and touch some on goals and metrics as well. [Note: while there’s some debate in the startup community — I sometimes see “growth” teams responsible for hiring or supporting the operational growth of the company — my definition of Growth is the team that’s optimizing for customer acquisition and product usage growth.]
So let’s dive in.
Building the Right Growth Culture
I increasingly see growth as less of a specific team within a company, and more of an intrinsic part of a company’s mindset. Some people will have the word “growth” in their job title and some won’t, but everyone in the company, from the CEO on down, works on and contributes to growth — the same way everyone is ultimately responsible for brand, or for customer happiness.
Just as importantly, growth is a mentality and an outcome of good, thoughtful work, but not a value unto itself.
Bad outcomes are common when companies prioritize — and culturally reward — short-term growth at any cost. Think Theranos, early Zenefits, or Uber’s various setbacks. It’s important to have short-term priorities around acquisition or retention — but growth can’t be successful unless it’s sustainable. It’s a long-term process.
While this may be more philosophical than actionable for you — I’ll get to actual team design in a moment — it bears repeating. I’ve seen a lot of corporate and personal pain when this north star is off the mark.
Celebrate customer success around your company. Measure then reward your team(s) for generating sustainable product usage. Daily active users (DAUs) is almost always a better metric than monthly active users (MAUs). Growth metrics and money alone are not sufficient, long-term motivation for most employees. Hitting growth goals that ladder up to meaningful work, achievement and customer problem-solving will be.
Everything is so much easier when you build on the right foundation of passion and purpose.
Ok, off my soap box. Let’s get into how to actually do this.
Growth Team 101 – Going from 0 to ∞
If your startup is in the 0 – 20 employee range, everyone is in growth. In particular, if you’re a B2C technology company, whoever owns product (one or multiple co-founders, maybe your first product manager) should have specific growth metrics and priorities within their overall responsibility set. In B2B, co-founders and anyone working in an early sales or business development capacity is your growth team.
A lot of the conventional wisdom says you need to find product marketing fit first (without growth). Then layer growth on top of a great product. I disagree. The best growth comes from designing and testing your product and company through a growth lens as early as possible. Consider questions like:
- Acquisition. What is the best design approach and flow to bring someone into your product for the first time (then get them using it, keep them engaged and bring them back)? If you’ve made a mobile app, how are you going to get people to the app store?
- SEO. How should you design your website, product and content ecosystem so when it grows, it grows from a foundation built on sustainable SEO best practices?
- Data. When you acquire customers or they use your product, what data do you capture? Where does that data go? How is your team going to access and learn from it?
There are many growth considerations when designing a web or mobile product, as well as structuring the operations and infrastructure of a company. The earlier you answer those questions and build that foundation, the better. Getting to product-market fit itself is often incremental and iterative. Whether you’re B2C or B2B, incorporate growth thinking into your product and org design as early as possible. If no one on the founding team has prior growth experience, find an advisor or mentor who does.
Somewhere between the 10-20 employee mark (and definitely if you pass 20+), make your first dedicated Growth hire. This should be either an acquisition marketer who’s technical enough to work closely with your product team, or a product manager (PM) with experience building products optimized for customer acquisition, activation and retention. If I had to choose between the two I’d hire the PM and assign them these responsibilities:
- Set growth goals and KPIs working in partnership with the executive team
- Customer lifecycle management. Oversight, measurement and optimization for each customer journey stage:
- Awareness – Brand and product discovery and understanding
- Acquisition – Signing up or purchasing the product
- Activation – Product on-boarding and initial usage
- Retention – Ongoing usage and renewal
- Expansion (Monetization) – Up-sell and incremental feature adoption and value capture
- Advocacy – Any referral or viral capabilities built into your product
- Growth-oriented product roadmap. Creation, management and prioritization of product roadmap and resources to generate customer lifecycle growth, deliver a better user experience, and remove friction.
- Growth experiments and reporting. Oversight, design and execution of in-product and channel tests at different customer lifecycle steps to optimize velocity, conversation rate, etc.
- Growth technology stack and infrastructure. Procurement, design, and ownership of the company’s growth stack, which will include:
- Data warehousing for data science and business intelligence [until this becomes large enough to warrant its own dedicated hire]
- App notifications and user communication – push, email, in-app, etc.
As Growth’s efforts succeed and the company expands, this role will increasingly need to take on cross-functional recruiting, people management, internal collaboration and launch marketing responsibilities. If you’re looking for recruiting profiles for early Growth hires, YCombinator has some good resources for that here.
Prioritize product-driven growth until you have bandwidth to run more dedicated, top-of-funnel marketing activities. I started on the marketing side as the first Growth leader/team-member at Percolate, which was helpful for getting budget to run acquisition programs, but made it organizationally challenging to get product resources for activation, retention or downstream analytics support in the early days.
It’s always better in Growth to work your way back up the funnel versus starting at acquisition and working your way down. Prioritize the point and time where customers are getting value from your product and anchor your growth prioritization from there.
Growth Team Structure and Organization Design
Recruiting, managing and developing employees, and getting the right organization design in place are some of the most challenging responsibilities any leader or manager will face in their career, particularly in a high-growth, dynamic environment where things are changing all the time. Apart from getting to product-market fit, getting the right system in place for your people largely is the challenge to navigate.
As I’ve said about previously, Growth needs to be well-integrated across the company, its operations and its decision-making. The more agile, connected, and responsive you can make the different elements of your company, the better.
In B2C, with a consumer web or mobile product, the Growth team should be independent but closely adjacent to product with a dotted line to any separate Brand or Communications team. This is the model companies like Facebook, Uber and BuzzFeed use.
In B2B, Growth should still be as tied to product but have a closer relationship with the rest of marketing as well as sales.
At the team level, individual mileage will vary, but I would approach building out your growth team like this:
Start with Growth reporting to the acting “Head of Product” up through your first three hires. This is a post-seed or Series A stage growth team. Growth PM’s first hire is a full-stack, generalist growth engineer. This is usually a difficult-but-rewarding hire who should be as interested in web scraping and optimizing a landing page as they are on long, complex engineering projects. I’ve had best results hiring engineers who made one startup stop in between a dev bootcamp and coming to work for me (1-2 years of startup experience), or who worked on a small/solo project that didn’t work out. Make sure you also set up a career path where this engineer can graduate to a full-fledged app team role in 18-24 months, otherwise you risk churn out because the long-term technical complexity of Growth isn’t developmentally rewarding enough for many engineers.
Third, hire a data and test-driven marketer with proficiency in SEO, email marketing, paid social acquisition, and Google Analytics, as well as mobile acquisition if it’s relevant to your product. You’re really just looking for a creative and driven experimenter who also shows good empathy and communications/content intuition.
This team owns your website, website traffic generation, the rest of the conversion funnel, entry and exit points in your product, and all related analytics, tools and infrastructure.
As the team continues to grow beyond this point, that’s when I’d recommend hiring (or promoting) a dedicated Growth leader, establishing Growth as a dedicated function, and build more specialization into the individual team-members’ roles. The team structure would look something like this:
There are a few different ways to model headcount in this stage.
The first is basing it on overall acquisition spend, if it’s meaningful (or applicable at all). It’s common to see companies target a 1:4 or 1:5 ratio of Growth headcount to acquisition spend. So if you were spending $2 million or more a year on performance or direct-response marketing, and you have less than $400,000 of employees working on the Growth team, there’s increasingly a risk that you’re going to overspend at one point of the customer acquisition funnel relative to the team in place to manage, track, optimize and make engineering refinements against it. Google is an example of a company that benchmarks against this ratio.
Find the right balance for your business; it’s certainly possible to push it higher (particularly with the right agency support), and it should also tie back to your CAC:LTV ratio and acceptable burn rate.
Growth headcount can also be benchmarked against overall revenue. Common ratios I observe are:
Conservative large company: marketing budget is equal to 1-5% of total annual revenue
Typical large company: marketing budget is 6-8% of annual revenue
High-margin consumer products company (i.e., cosmetics, CPG): marketing budget is 8-12% of annual revenue
High-growth VC-backed startup: marketing budget is equal to 15-25% of annual revenue
So let’s say you’re a company with $10 million in annual revenue and the decision is to spend 20% on marketing for a $2 million annual budget. Then you apply your desired people to program spend ratio, minus infrastructure and technology costs.
I’ve also just seen companies use a simpler approach and target a ~1:10 or 1:15 employee ratio. For every 10-15 employees you have/hire, put one on the Growth team until it’s functionally built out around 5-7 FTEs (unless other brand or communications responsibilities need to be filled instead). A 50 employee company would have a three-to-five person Growth team, under that system.
Since growth is largely based on creating and leveraging economies of scale, once you grow past the ~200+ employee mark you can significantly pare down this ratio. Facebook operated with a 1:100 ratio once it grew beyond a few thousand employees.
There’s no one right answer here, and it’s important to get to the answer that’s right for you. That answer will normally depend on (a) market – the business / industry you’re in, (b) money – how much cash you have and your acceptable burn rate, (c) business math – the economics of your customer acquisition funnel, and (d) velocity – how fast you’re looking to grow. Once you understand those four levers it’s more straightforward to forecast the right team size.
As you grow beyond the founding “two pizza” Growth team, look to bring on additional specialization in data science and experience design, as well as introduce inter-team segmentation around different steps of your acquisition funnel and product areas.
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Working Well With the Rest of the Company
As a team that’s naturally pushing the company to always be bigger, better and faster, Growth is always going to create internal tension.
In the early days, I remember several “polite professional differences of opinion” with our Brand team when I wanted to A/B test ads faster than they could make them, so I’d make and run my own (and yeah, some of them were pretty terrible. I’m very thankful to that team for coaching me on how to be a more design-driven leader and thinker). Or differences of opinions with our App team PMs on the use and frequency of user notifications.
No company is perfect, and these tensions surface a lot — the relationship between Growth and Brand, or Growth and other areas of Product — and it’s important to manage them from a place of mutual respect, transparency, and empathy.
Make sure executive leadership sets and communicates very clear company-level priorities, and get them in writing. Use that guidance to start the internal dialogue with every relevant stakeholder — Head of Product, Head of Brand or Communications, etc. — on how Growth’s roadmap contributes to those goals, how resources will be allocated internally, and how Growth can strike the right balance between its targets and other key considerations like customer experience design or competing product roadmap priorities. Make everything about getting to overall company wins and milestones — not just beating team-specific KPIs — and build internal trust from there.
Technology companies that achieve the right balance — and convergence — between product and marketing have a major competitive advantage over those that don’t, and Growth has the potential to be a defining middle node in the network.
Hope all this has been useful. If it has, go recruit some great people and build something awesome with them. ?